EC Tech-Fueled Nasdaq Continues To Lead The Way

Expect some thinner volumes today as US markets observe Martin Luther King Jr Day. US markets will reopen as normal tomorrow.

In US stocks last week, technology firms continued to lead the way, with the tech-heavy Nasdaq composite up 4.6% in January so far. Advanced Micro Devices (AMD), one of the US market’s top performers last year, is helping to drive the index higher. The semiconductor firm is up 11.1% year-to-date and has gained 145% over the past 12 months. Rival Qualcomm, which has double the market cap, is not far behind. The stock is up 8.7% YTD, including a 4.5% gain on Friday after analysts at Citi upgraded their rating on the firm from neutral to buy. Analyst Christopher Daley said that the company’s share of the emerging 5G mark gives it room to expand revenues and margins. Nvidia and Micron Technology are both off to strong starts too, with share price gains of 5.9% and 7.2%, respectively, while Intel is lagging behind with a 0.4% share price drop year-to-date.

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Has FeverTree lost its fizz?

FeverTree, the drinks manufacturer, has today warned its full year results will be below expectations after a subdued Christmas trading period in the UK.

Despite success abroad, and an overall rise in revenues of 9.7%, a weaker than expected UK performance prompted the board to warn that revenues could decline by 5% for 2019 as a whole. The company blamed weak UK consumer confidence for the lacklustre numbers and shares are down 22% at the time of writing. This is the second revenue warning in the space of 3 months with shares having lost 60% of their value since their September 2018 peak, analysts at Jefferies have even said the company may now be a takeover target for one of the big soda companies. Can a turnaround in fortunes see shares fill the gap? Or could further revenue warnings see them fall further?

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China deal relief boosts stocks

While the first week of the US Q4 corporate earnings season led to big share price moves in individual names, there were some broader factors driving the market higher last week. Investment firm Charles Schwab pointed to a host of favorable economic reports from China covering December, while new US home construction also hit its highest level in more than a decade. There was also relief that the US-China phase one trade deal was finally signed, although trade will likely remain a significant source of volatility as negotiations on a phase two deal begin. During the week, the Nasdaq Composite climbed 2.3%, the S&P 500 2% and the Dow Jones Industrial Average 1.8%. Boeing held the Dow back on Friday with a 2.4% share price drop. While the plane maker’s stock is still trading around 25% lower than its peak before the 737 Max crisis hit, over the past six months its stock is effectively flat, albeit with lots of ups and downs along the way.

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